Foreign capital is rapidly flowing into South Korea’s rental housing market as the shift to monthly rent accelerates. Investment banks, pension funds, and real estate companies, regarded as global heavyweights, are forming joint ventures (JVs) with local firms that have strong expertise in the domestic housing market. The rising demand for monthly rentals, particularly among young people after the fraud crisis involving “jeonse” (Korean-style deposit leases), is driving growth in the corporate rental sector. With the government pushing policies to attract more businesses into the market to increase housing supply, foreign investors are expected to keep pouring into corporate rental housing projects.
According to industry sources on Feb. 14, foreign financial investment firms have been increasingly targeting the domestic rental market. Last month, CPP Investments formed a joint venture with Korean real estate developer MGRV to develop rental housing projects. This JV plans to invest up to 133 billion won to develop rental housing near major business districts and universities in Seoul.
In November last year, Morgan Stanley purchased GWell Homes Life Gangdong, a studio-type rental housing complex in Gangdong-gu, Seoul, for 13.3 billion won and remodeled it into rental housing with Korean operator SL Platform (SLP). U.S. private equity firm KKR also established a joint venture with Hong Kong-based co-living company Weave Living earlier this year, launching the premium residence The State Sunyu Hotel in Yeongdeungpo-gu, Seoul.
Foreign investors are entering Korea’s rental market as the housing sector increasingly moves toward monthly rental payments. Following the jeonse fraud crisis in 2022, the proportion of monthly rentals in the housing lease market has risen sharply. As society becomes more accepting of monthly rent, and with more young people preferring to rent over buy, monthly rental demand is expected to grow further. According to the Korea Housing Institute’s report on the 2025 housing market outlook and policy direction, monthly rental demand is expected to grow as the population reaching age 30 increases from an average of 673,000 annually between 2018 and 2021 to around 750,000 after 2023.
The government is expanding the corporate rental housing market to boost housing supply, which will likely attract more foreign capital. Last year, it introduced a plan allowing real estate investment trusts (REITs), developers, and insurance companies to operate rental properties for over 20 years. This corporate long-term rental housing plan provides rent regulation exemptions and tax benefits for companies involved in large-scale long-term rental projects, aiming to supply over 100,000 corporate rental units by 2035.
The Special Act on Private Rental Housing containing these provisions is scheduled for parliamentary discussion at the end of this month. Land, Infrastructure, and Transport Minister Park Sang-woo on Feb. 11 said, “Major public welfare bills, including the Private Rental Housing Act for introducing new types of long-term rentals, are still pending in the National Assembly,” adding, “We will do our best to ensure these major bills are passed in February’s parliamentary session.”
The real estate development market anticipates that once the bill passes, foreign capital’s entry into the domestic rental housing market will accelerate. As the domestic housing lease market still differs from countries where monthly rent is well-established, foreign firms are expected to continue entering through joint ventures with local companies.
